Home Loan Processing Fee

The home loan processing fee is the charge borne by you, the borrower, towards the lender once your home loan application has been accepted. The processing charges for home loans occur only once. Make sure to calculate the cost of your home loan by taking the processing fees into consideration. Compare lenders and choose a home loan with the lowest processing fee.

What is the processing fee for a home loan?

A home loan processing fee is a one-time charge levied by the lender before your loan is sanctioned. This amount is collected to meet the costs involved in assessing your credit profile, verifying documents, conducting background checks, and carrying out other essential administrative activities related to your loan application.

The fee differs across financial institutions but usually falls within the range of 0.50% to 3.00% of the loan value. For instance, on a loan of Rs. 17 lakh, a processing fee of 0.5% would amount to Rs. 8,500. It is important to note that this fee is not included in the loan amount and must be paid separately. Furthermore, the initial money deposit (IMD), a part of the processing cost, is non-refundable, even if the loan application is not approved.

When planning your home purchase, understanding these processing fees helps you budget better and choose the right lender. Bajaj Finserv offers competitive processing, making homeownership more affordable for you. Check your eligibility for a home loan from Bajaj Finserv today. You may already be eligible, find out by entering your mobile number and OTP.

Different home loan fees and charges in India

When you apply for a home loan in India, you may come across several additional expenses apart from the interest rate. These charges can significantly affect your overall borrowing cost, which makes it vital to understand them before proceeding. Being aware of these fees helps you prepare your budget in advance and compare different lenders effectively.

Note: The figures mentioned are for illustration only. Always confirm the exact fees with your chosen lender before finalising your application.

Comparing different lenders' fee structures is crucial for making an informed decision about your home loan. With Bajaj Finserv's transparent pricing and competitive rates starting from 7.45%* p.a, you can plan your home financing with confidence. Check your loan offers from Bajaj Finserv now. You may already be eligible, find out by entering your mobile number and OTP.

Detailed explanation of home loan fees and charges in India

When taking a home loan, it is not just the interest rate that matters. Various other charges can affect your borrowing cost, and knowing them in detail will give you a clear idea of what to expect. Below is a breakdown of the most common fees and charges.

1. Processing fees

• What it is: A non-refundable charge covering the cost of assessing your application, verifying documents, and conducting credit checks.
• How it’s calculated: Usually a percentage of the loan, between 0.25% and 3%. For example, some lenders may charge up to 1% of the loan amount or Rs. 10,000, whichever is higher, plus GST.
• When it’s paid: Partly at the time of applying and the rest during loan disbursement.

2. Administrative fees

• What it is: Some lenders collect a separate administrative charge for reviewing your application.
• How it’s calculated: May be a fixed amount or a percentage of the loan, depending on the lender.
• When it’s paid: Generally, at the time of disbursement.

3. Legal and valuation fees

• What it is: Covers legal checks of the property’s ownership and valuation of its market worth.
• Legal fees: Ensures the property has a clear title and is free from disputes.
• Valuation fees: Determines the property’s actual value as security for the loan.
• How it’s calculated: Varies based on property location, size, and complexity. Some lenders combine these with processing fees.
• When it’s paid: Usually upfront or at disbursement.

4. Documentation charges

• What it is: Collected for preparing and validating loan agreements and other paperwork.
• How it’s calculated: Either a fixed fee or a percentage of the loan.
• When it’s paid: At the time of disbursal.

5. Stamp duty and registration charges

• What it is: Government-imposed charges for registering the property and loan agreement.
• How it’s calculated: Varies across states and depends on the property’s value.
• When it’s paid: At the time of property registration.

6. Goods and Services Tax (GST)

• What it is: A tax applicable to most loan-related fees, such as processing and administrative charges.
• How it’s calculated: Currently levied at 18% on financial services.
• When it’s paid: Collected along with the applicable fee.

7. Prepayment/ Foreclosure charges

• What it is: Fees if you repay the loan partly (prepayment) or entirely (foreclosure) before the agreed term.
• How it’s calculated: Depends on the loan type and lender’s policy. For floating-rate loans, RBI rules prohibit these charges, but fixed-rate loans may attract 1%–3% of the outstanding balance.
• When it’s paid: At the time of repayment.

8. Late payment penalties

• What it is: Applied when EMIs are not paid on time.
• How it’s calculated: Usually 1%–2% of the overdue EMI, sometimes with extra penal interest.
• When it’s paid: Added to the EMI when repayment is delayed.

9. Conversion charges

• What it is: Charged if you switch your loan to a different interest scheme, such as moving from fixed to floating.
• How it’s calculated: Typically, 0.5% to 1% of the outstanding loan amount.
• When it’s paid: At the time of conversion.

10. Other charges

• What it is: Miscellaneous costs that may apply during or after the loan process.
• Examples include:
  • Cheque bounce penalties.
  • Charges for retrieving original documents after closure.
  • Fees for issuing physical statements or certificates.
  • MODT (Memorandum of Deposit of Title Deed) registration charges.
  • Insurance premiums for loan or property cover.
  • Custody fees for uncollected property documents after closure.
• How it’s calculated: Fixed amounts or actual costs incurred.
• When it’s paid: As and when the related service is used.

Here's a breakdown of the typical fees and charges associated with a Bajaj Housing Finance Home Loan.

Note: GST is applicable at 18% on most fees and charges. This table provides a general overview, and it is recommended to review the specific terms and conditions outlined in your loan agreement or consult with a Bajaj Housing Finance representative for precise information.